Last week, Gulveen Aulakh of the Economic Times broke the news that the recently re-registered copyright society Indian Performing Rights Society (IPRS) has written to Indian telecom companies and platforms such as Apple and YouTube, demanding that they pay up for the use of IPRS’s repertoire, either by way of streaming or downloads. The recipients of these notices reportedly also include Bharti Airtel, Vodafone India, Idea Cellular and Reliance Jio.
Apparently, some of these telecos have told the ET that they aren’t too bothered about the notices because they licence their music from aggregators like Saregama, Hungama, Hotstar etc. I am not aware of the content of those licenses but given the history of the music industry and lack of clarity on ownership it is entirely possible that we will see potential litigation erupting between IPRS and the platforms/telcos.
What are the rights assigned to IPRS?
The first and most contentious issue is going to be the issue of ownership. What are the rights that IPRS has been authorized to administer? That is easier asked than answered. Sometime ago IPRS had made available a list of works that it claims to be administering but that list is currently not available on its website – instead a beta search facility for its catalogue has been made available on its website. This search facility is not working right now, putting IPRS in breach of Rule 66 of the Copyright Rules, 2013. But even presuming that the search facility gets back online, the question is whether the music labels are going to challenge IPRS’s claim of being authorized to deal with the songs in question. The fact of the matter is that the entire catalogue of Indian music is already available on all the platforms mentioned above. This means that somebody is already licensing this music to the platforms like YouTube – why then are these platforms now going to start paying even IPRS? And are the people currently making money of these licensing deals going to sit back and let IPRS take away their money?
Music prior to the Copyright (Amendment) Act, 2012 – intra-industry ownership disputes & the ‘digital works’ dispute
As we have discussed a number of times on this blog, the music labels claim ownership of most of the pre-2012 music on the grounds that the composers and lyricists who wrote the lyrics and songs were employees of the production houses who ended up being the first owners of copyrights under Section 17 and who then transferred the copyright to the music label. So, one line of argument has always been that the authors do not own the copyright in any works and as a result they can’t really assign any rights to IPRS. Thus, for IPRS to administer these rights, it would require all the music labels to join IPRS but as we know, several music companies like Zee Music, Shemaroo, Yash Raj Music and T-Series aren’t members of IPRS. And I seriously doubt if they are going to join IPRS.
To complicate the issue, it remains to be seen if the authors and production houses raise any disputes with music labels on the issue of ‘digital works’ because a lot of the pre-digital contracts were drafted around the concept of ‘records’. Some of our older readers may remember that seven years ago, there was a dispute on this issue between Sholay Media & Entertainment and Universal and Vodafone. While Sholay Media wanted royalties from Vodafone for ringtones and music downloads, it first needed to trump Universal’s claims to owning the music in the movie Sholay. The dispute revolved around certain phrases in the contracts between Sholay and Universal. For example, did the phrase ‘record’ also cover digital works and streaming? The definition of the phrase in the contract was as follows:
“(ii) Record‟ shall mean and include disc, tapes, including magnetic tape (whether reel to reel, endless loop in cassette or cartridge form, or otherwise howsoever) or any other device of whatsoever nature in which sounds are embodied so as to be capable of being reproduced therefrom and all such devices as presently known or that may hereafter be developed and known but excluding the sound track associated with a Cinematograph Film.”
This is of course only the surface of the dispute. There are several more complicated issues that were to be settled in this case.
The Delhi High Court had denied an interim injunction in 2011 and sent the matter for trial – I tracked the lawsuit till 2016 on the HC’s website after which records aren’t available. It appears that no judgment has been rendered in this case as of 2018.
The question remains as to how many more production houses and authors raise similar issues?
Post-2012 complications
Things get even more complicated post the enactment of the Copyright (Amendment) Act, 2012. Amongst other things, the law created a mandatory royalty sharing provision and this right to collect royalties could be assigned by authors only to copyright societies and nobody else. Linked to this clause is the mandatory requirement that only copyright societies could be in the business of issuing licenses for music.
From the rumours that have been flying about, it appears that music labels and production houses have been trying to circumvent these clauses with creative and potentially illegal contracts. Theoretically those authors can simply go to IPRS and get it to demand a share of royalties from the exploitation of their compositions.
Retrospective application of the 2012 law?
Then there is the issue of whether IPRS intends to claim that the 2012 amendments have retrospective effect i.e. they apply prior to 2012? Statutory law normally does not apply retrospectively unless Parliament makes a specific provision for it. The question here is whether the 2012 amendments have an affect on contracts entered into prior 2012? That is to say if a contract was entered in 2010 will it be possible to argue that once the 2012 amendments were notified, the terms of the contracts will necessarily have to comply with the new law failing which the contract can be deemed to be void. Most contracts have a clause requiring both parties to comply with the law of the law and if the 2012 amendments has created a new compulsory mandate it follows that parties will have to follow this mandate.
Inevitable litigation
Most of the issues I mention above are not new and have been festering for a long time. The parties in question have been stalling inevitable litigation with half-measures and compromises. If this time around, a dispute does break out, it would be in everybody’s best interests that the matter is litigated before a court of law and a judgment rendered.
Of course, that’s only my view and I’m quite certain that exactly the opposite will happen – the interested parties will enter into the typical ‘na tera na mera’ Indian style compromise.
In any event if the music industry embarks on this fresh round of litigation, I do hope they also scout the market for new legal talent rather than stick to the old firms which are simply not delivering the goods. There has been a silent exodus, over the last year, of youngish lawyers from IP law firms who I am sure will be able to provide competent and creative legal representation. A dose of competition in IP litigation is seriously required and this is as good a time as any for the industry to tap fresh talent.
Few thoughts:
i. In my view, the platform owners cannot shy away from their responsibility of royalty payment irrespective of the entity from whom they have obtained their license. Content on its own does not attract royalties. Its only on the exploitation of the content / utilization of the works that royalties become payable. Thus, logically the entity communicating the work to the public should be responsible for royalty payment and would be a necessary party to any suit pertaining to royalty payments.
ii. With regards to issue of ownership, I feel it is important to harmoniously read the provisos to Section 33(1) so as to reach the conclusion that cinematograph films/ sound recordings cannot be exploited without paying royalties to the authors as it would be in contravention of Section 18.
iii. The Amendment cannot have retrospective application. One can even refer to the parliamentary debates in this regard which talk about the historic injustice and the objective to correct the historic injustice. In his speech, Javed Akhtar had mentioned that while the author of a song released in 1960 would not be permitted to claim royalties accrued from utilization of the song from 1960 till date, the Amendment would empower him to claim the royalties arising from the exploitation of the same song subsequent to the Amendment coming into force.
Good Piece Prashant and you are right about the typical ‘na tera na mera’ Indian style compromise. That is what keeps things from being clarified once and for all. Lets see.
I fully agree with Anushrees Thoughts… Very Clear and Correct
“Thus, logically the entity communicationg the work to the public should be responsible for royalty payment” – what if such entity has already paid huge amounts as license fee to the licensor, woudn’t such entity demand that the Licensor should be responsible to pay the royalties as it has already paid a large lump-sum amount to licensor? It may argue that the License fee includes all future royalties
Mr. Vivek Anand, to answer your question- there are two aspects to this. As mentioned in my second point, it is important to read the provisos to Section 33(1) harmoniously which means that owners of sound recording rights would need to be members of IPRS and there cannot be two entities granting the same set of rights. For e.g. Novex and IPRS cannot both be granting public performance rights. In an ideal situation, if labels join IPRS then platform providers of music content (such as Gaana, Saavn, Wynk, Jio Music, etc) would need to obtain only one license i.e. from IPRS and not require separate license from the labels.
However, in the second scenario where music labels do not join IPRS, it is indeed possible that the platform owner may have a contractual arrangement with its licensor to include royalties in the lump sum consideration given as license fee and may put the onus on its licensor to pay royalties to any copyright society. To my knowledge, there is nothing in the Copyright Act which restricts that. But then it would be the licensor’s obligation to make sure that the royalties are paid to the authors and assignees as per Section 18 of the Copyright Act. However, my comment was oriented to the fact that at the first instance the copyright society is bound to reach out to the platform provider since they are the ones communicating the work to the public and would thus be a necessary party to any such litigation. Of course, the onus of payment of royalties by platform provider or licensor would be subject to contractual understanding between them.
Would love to have Prashant’s take on this.
Hi Anushree,
Do you run a law firm that specialises in contracts?
I have recently launched a digital content production studio and we are going to publish our web series on YouTube and other platforms.
I am looking for a lawyer or law firm that can help draft contracts with production houses, co producers, investors and creatives.
Let me know if you can help or refer someone.
– Sudarshan
Just one clarification: As per my understanding, separate license with respect to sound recording rights may be required to be taken from the owner of such rights. IPRS deals only in underlying lyrics and composition and not in sound recording rights.
Interesting. My opinions on the subject would have to be a several-part post which I haven’t time for assuming, it would be accepted. But briefly: (i) Sections 33 and 34 read together make the function of a copyright society clear: it alone can grant third-party licences i.e. licences in works that it does not own. The Notes on Clauses to the 1994 bill also make this legislative intention abundantly clear. All these years, until very recently, nobody has raised the nonsensical argument that only copyright societies and not owners can grant licences. (ii) The grant of a licence has nothing to do with the 3rd and 4th provisos to Section 18; these provisos do not give the author any right to licence, merely a vaguely defined right to royalty. (iii) An author is not compelled to assign his works, only prohibited from doing so except to a copyright society. What is to stop him from entering into a royalty agreement with a record label which is only a licence (even an exclusive licence)? (iv) Section 6(c) of the General Clauses Act is very clear about vested rights which cannot be taken away by any amendment that is not retroactive: plenty of case law on that. (v) An agreement applying to unknown future amendments of the law would surely be void for uncertainty.
Correction. What I meant to say in point iii was that an author is not compelled to assign his special right to royalty under the third and fourth provisos, only restrained from doing to anybody but a copyright society.